By Emad Mekay

The state of the global economy and efforts to fine-tune the decision-making process at the World Bank and its sister institution, the International Monetary Fund (IMF), to include a greater voice for developing nations will dominate the lenders' high-profile annual meetings in Singapore next week.

The IMF and the World Bank have been two of the most influential multilateral organisations in the world, whose pressure on borrowing nations to implement market reforms has been an essential engine of corporate globalisation. Their meetings are often a bellwether of the direction of global economic policies and the health of the international finance system.

During the coming meetings, the main issue for the World Bank will be its president's much-touted anti-corruption drive, a topic that Bank sources say has become the number one issue in the hallways of the Washington-based institution in the run-up to the Sep. 19-20 official meetings.

Paul Wolfowitz will unveil his anti-corruption and good governance framework and expects full backing from the world's richest nations, which dominate both Bretton Woods institutions since their creation in the aftermath of World War II. The United States is the single biggest shareholder in both the Bank and the IMF.

Wolfowitz recently announced a long-term strategy for using the Bank's funds and expertise to help developing countries rid their governments of bribe-taking and other dishonest practices. A key component will be the deployment of anti-corruption teams in many World Bank country offices. He also has plans to restructure the Bank's Department of Institutional Integrity, a watchdog, to make its authority clearer and its operations more effective.

However, some non-governmental organisations that oppose the pro-corporate policies of the Fund and the Bank have questioned whether Wolfowitz, a major architect of the U.S. neo-conservative-led war in Iraq, is using an agenda of democracy and reform to squeeze regimes unfriendly to the United States. NGOs are facing a dilemma because addressing corruption has been one of their long-time demands of the Bank, but many are concerned that the campaign will fail to bring about real change that would benefit borrowing nations.

An article by Shannon Lawrence and Peter Bosshard of the U.S.-based International Rivers Network notes that the Bank's anti-corruption framework skirts key issues of corruption in development finance, and that fighting corruption at the level of individual projects and contracts will remain a losing battle unless the World Bank addresses the systemic mechanisms of corruption.

Many also say it will be interesting to see whether the Bank will agree to review its own role in corruption and its past "illegitimate" lending to corrupt regimes as a measure of its sincerity. "We call on the Bank to undertake an audit of its own past lending, if it is serious about addressing the underlying causes of corruption in impoverished countries," said Debayani Kar of the prominent anti-debt group Jubilee USA Network. Kar says that many debts in these developing countries can be classified as illegitimate, given that the loans were made to kleptocratic regimes such as that of Suharto in Indonesia and the Duvaliers in Haiti.

The Bank's plan for clean energy and climate change is another major item on the annual meetings' agenda.The plan was drafted at the urging of the world's most industrialised nations last year as they faced spiraling oil prices. The Bank, which will unveil the energy framework in Singapore, says it will help combat climate change and expand energy access for the poor. The lender says it committed 871 million dollars to renewable energy and energy efficiency programmes in 2006.

But critics argue its mandate is primarily to serve wealthier nations in their never-ending quest for energy sources and facilitate their search for oil outside of OPEC nations. They say that the document largely ignores alternative and renewable energy sources while advocating mega-projects like hydro-electric dams and nuclear plants, which have traditionally come at a high price for local communities and the environment and fat profit margins for multinational corporations.

Civil society groups plan to air these complaints at the International People's Forum on the Indonesian tourist island of Batam, after Singapore vowed harsh a crackdown on watchdog groups at the official meetings. But activists could also face restrictions in Batam, as local authorities appear reluctant to host them. Local police initially withdrew the permit for the gathering, only to re-issue it after an international outcry.

The other major player at the meetings, the IMF, faces its own issues of governance structure and changes in voice and quota for developing nations. IMF Managing Director Rodrigo de Rato has announced plans to increase the voting shares of key emerging market countries, particularly China, Mexico, Turkey and South Korea. He awaits formal endorsement of the proposal at the meetings. Activists and some developing nations have been pressing for such a change in the decision-making structure inside the IMF and the World Bank for many years.

Doubts about the Fund's future -- from supporters and critics alike -- have intensified in the past few months since two of its main clients, Argentina and Brazil, announced that they were paying back their debts early. The move prompted speculation that the IMF may be losing its leverage and financial resource base.

Economists and analysts now say that since quotas determine the votes on the board of the IMF, as well as commitments to pay in and rights to draw on the IMF's resources, the move is just "a first step" towards making the IMF a more representative and legitimate global institution. Far more will need to be done beyond the Singapore gathering.

"Rodrigo de Rato has shown a serious commitment to IMF reform by advancing and pursuing new ideas in the face of resistance to deeper change," said two economists from the Washington-based Brookings Institution in a study on the Fund's future. "However, to break the logjam in global governance reform which has been building for decades, an ambitious grand bargain will have to be struck, going even beyond Mr. de Rato's long-term agenda, not to mention the baby steps to be taken in Singapore."

In the study released this month, Johannes F. Linn and Colin I. Bradford warned: "Failure to move now towards such a governance structure will likely mean a progressive weakening of the current global institutions, including the IMF, the World Bank and WTO (World Trade Organisation)".

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